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Qatar construction sector expected to be strong in 2012

The construction sector in Qatar is expected to be strong this year, although with lower margins. The construction sector will continue to benefit from the government spending in the sector, said Fitch Ratings. According to the rating agency, the MENA construction sector will continue to be benefitted by the spending of Qatari government, Abu Dhabi and Saudi Arabia into this sector, as these markets have seen major infrastructure spending plans, backed by respective government and government entities.

The construction sector in Dubai, however, will continue to remain weak int he medium term. The rating agency has assessed the construction outlook by mainly considering major factors such as government fiscal flexibility and extent of historical infrastructure spending.

In Qatar and Saudi Arabia, investment on infrastructure is strong, albeit with lower margins. During the peak of construction, contractor margins in MENA region have been higher than its international peers. But, with increasing competition, contractors have begin to opt for lower margins, and this may continue for next few years, says Bashar Al Natoor, Director, Fitch – EMEA (Europe Middle East and Africa).

However, Fitch noted that Abu Dhabi has been lately cutting down on its investment on construction-related projects, due to oversupply concerns in the property market, and increasing financial commitments in the emirate and slowdown in the global economy.

A decline in project tenders across EMEA will increase competitive pressures. Contracting is all about inherently managing project risks and completing within the budget limit, Fitch pointed out.

Posted on 11/1/2012